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2018 (3) TMI 273 - AT - Service TaxCENVAT credit - common services used for taxable as well as exempted service - Rule 6 (3) (i) of Cenvat Credit Rules 2004 - whether the appellant is required to pay 6%/8% in terms of Rule 6(3) (i) of Cenvat Credit Rules, since they have availed the cenvat credit on the common input service used for taxable as well as exempted service? Held that: - though the appellant had availed cenvat credit on the common input service, out of the total credit except the credit related to the input service specified under Rule 6(5) of Cenvat Credit Rules, 2004, the entire credit was reversed before issuance of show cause notice. As per the prevailing Rule 6(3) there was a provision available for the assessee either to pay 8%/6% of the value of exempted goods or pay the proportionate credit attributed to the exempted goods. Therefore in the present case, the appellant have opted for reversal of credit attributed to the exempted goods however precautionary they have reversed the entire credit in respect of common input service used not only for exempted service but also for taxable service. This issue has been considered in detailed by this Tribunal in the case of Mercedece Benz India Pvt. Ltd. Vs. CCE, Pune [2015 (8) TMI 24 - CESTAT MUMBAI], where it was held that Rule 6 of the Cenvat Credit Rules is not enacted to extract illegal amount from the assessee. The main objective of the Rule 6 is to ensure that the assessee should not avail the Cenvat Credit in respect of input or input services which are used in or in relation to the manufacture of the exempted goods or for exempted services. The option was available to the assessee to reverse the proportionate credit under Rule 6(3) (ii) in terms of Rule 6(3A) of Cenvat Credit Rules, 2004. Accordingly, the demand of 8%/6% in terms of Rule 6(3) (i) cannot be sustained. As regard the cenvat credit retained by the appellant in respect of input service which are specified under Rule 6(5) of Cenvat Credit Rules, 2004, the said rule provides that there is no reversal is required even though the part of the service was used for exempted service. Appeal allowed - decided in favor of appellant.
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